Healey funds high street tax cuts with raid on gambling firms and online sellers
The government will fund tax breaks for small high street shops by hiking taxes on gambling and cracking down on online sellers, John Healey said.
In his first Budget, the Chancellor said he will slash taxes on the high street by raising the threshold at which small firms start paying business rates from £12,000 to £18,000.
The government will fund this by raising machine games duty, a tax levied on gambling firms, from 20 to 25 per cent. Betting firms have feared a hike to 40 per cent, making this tax raid far softer than rumoured.
The Chancellor said a crackdown on online retail will also fund these tax breaks for physical retailers. E-commerce platforms like Amazon and Ebay will be made responsible for collecting VAT directly from the sellers that use their platforms.
The hike to the business rates relief threshold will benefit 70,000 high street businesses, meaning half of the UK’s shops, restaurants and gyms will no longer pay the tax, Healey said.
“For our high streets, it is gaming machines and vape shops that will help provide the funding for our pubs, cafes and shops to thrive. Breathing space now, while taking the long-term action needed to get costs down for good,” he told the House of Commons.
Andy Burnham has made revitalising British high streets a central pledge of his premiership, and had previously said he would hike taxes on “out of town” warehouses to pay for it.
This drew the ire of high street bosses, who warned that higher taxes on the warehouses they use would translate into higher prices for shoppers. The boss of John Lewis said this tax raid would betray a “fundamental misunderstanding” of the high street.
These new rules for online sellers come in place of a tax hike for warehouses, which was ruled out ahead of the Budget. London Mayor Sadiq Khan said earlier this week that e-commerce giants like Amazon are not paying their fair share of tax compared to physical retailers.
Retailers dodge warehouse tax
The crackdown on online sellers had been welcomed by Ebay and Amazon ahead of the Budget. Earlier reports suggested this measure would raise about £1bn.
Some of Britain’s largest gambling operators have already announced significant cuts following tax increases introduced in last year’s Budget.
William Hill owner Evoke disclosed last week that it had closed 270 betting shops over the past year, while Paddy Power owner Flutter has outlined plans to cut around 1,400 jobs across the UK and Ireland.
Independent modelling commissioned by the BGC from EY estimated that doubling the duty could put almost 1,500 betting shops and 34 casinos at risk, with up to 16,000 jobs potentially affected.
But London’s listed gambling firms were lifted following news that the 40 per cent machine games duty rate would not materialise. Ladbrokes owner Entain rose more than six per cent while Mecca Bingo owner Rank jumped nine per cent.